General Motors, its bankrupt parts supplier Delphi and the United Auto Workers Union have a deal to provide early retirement to union members and to move about 5,000 Delphi workers to GM. About 13,000 hourly-paid Delphi workers will be eligible for buyouts of at least $35,000 each.

ROBERT SIEGEL, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

MELISSA BLOCK, host:

And I'm Melissa Block. General Motors and its former subsidiary Delphi Corporation announced plans today to offer buyouts to more than 100,000 factory workers. The deal was worked out in months of negotiations with the United Auto Workers. It would give up to $140,000 to workers with the most seniority. The Special Attrition Program will cost GM a lot of money, but industry analysts say it's something the company must do to survive. NPR's Jack Speer reports.

JACK SPEER reporting:

GM lost more than $10 billion last year, so the company has little choice but to reduce costs fast. But that's not easy to do when you're GM and have to negotiate plant closings and layoffs with the UAW. All together, GM will offer buyouts to around 100,000 of its workers and another 13,000 at Delphi. David Cole is chairman of the Center for Automotive Research.

Dr. DAVID E. COLE (Chairman, Center for Automotive Research): Most workers in their latter stages of work are very focused on retirement and preserving those benefits, and one of the keys for both GM and Delphi workers is that if everything came apart, they could be huge losers. So there is, I think, a very powerful incentive on the part of workers to take advantage of this.

SPEER: And with both GM and Delphi weighing the cost of a possible strike at Delphi, the two companies also had a powerful incentive to get something done. But it's not yet clear exactly how many workers will agree to take the incentives, or what they will cost. GM has estimated its costs relating to Delphi alone could be at least $5.5 billion. As part of the deal, GM has also agreed to take back as many as 5,000 Delphi workers. George Arnold is the shop steward of UAW Local 292 in Kokomo, Indiana, and represents around 2,300 Delphi hourly workers. He says based on the initial reaction he's gotten from employees, he thinks quite a few will take the money and leave.

Mr. GEORGE ARNOLD (Shop steward, UAW Local 292, Kokomo, Indiana): Had several dozen people say that they're glad that there's an attrition package and that they will be taking it, and I think some of my membership has been waiting for some kind of a package to retire.

SPEER: But a number of GM employees in Detroit weren't so upbeat. They say they want to see more information before deciding whether to take an incentive package. Priscilla Bridges is a GM hourly worker.

Ms. PRISCILLA BRIDGES (Hourly worker, GM, Detroit): Well, my gut reaction, it all sounds good, but you definitely have to read the fine print and know exactly which package you're interested in, because it's a serious situation. You have to know exactly what you're doing.

SPEER: And even if the incentive program is a big success, the two companies still face problems. Delphi's CEO Steve Miller has said workers who remain with the company will face big pay cuts. David Healy is an auto industry analyst with Burnham Securities.

Mr. DAVID HEALY (Automotive analyst, Burnham Securities): Delphi's unionized labor costs in the U.S. are $65 an hour, and that they're, you know, including benefits. And they're competing with other parts manufacturers whose employment costs are one-third of that. And so he's proposed a 60 percent reduction in wages and benefits to the UAW Delphi workers, and the UAW Delphi workers are obviously not having any of it. So there's still this unresolved issue of the wages and benefits of the current Delphi workers.

SPEER: However, the fact GM and Delphi are offering early retirement to so many autoworkers is being seen as a positive development by many who watch the industry. The average autoworker at GM is 50 years old. They say by giving workers an incentive to leave early, GM and Delphi are taking a crucial first step toward creating a smaller and younger U.S. auto industry.

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